UPDATE: In reversal, Indiana will continue unemployment payments

Payments were stopped in response to looming 'sequester'

Photography by Darron Cummings / ASSOCIATED PRESS
(File Photo) Indiana Gov. Mike Pence prepares to deliver his State of the State address to a joint session of the legislature at the Statehouse in Indianapolis.

INDIANAPOLIS - Gov. Mike Pence's administration quickly scrapped its plans to stop 32,000 Hoosiers' unemployment payments as a result of looming federal spending cuts – a move Indiana looked like it would be alone in making.

The reversal occurred just hours after Pence's Indiana Department of Workforce Development had initially announced it would put all benefits on hold rather than guess at how much federally-extended unemployment payments should be reduced.

A two-sentence email from Gay Gilbert, the U.S. Department of Labor's unemployment insurance administrator, said the "sequester" would not affect benefits in early March and that more information would come on a Friday conference call.

That was enough to satisfy state officials, who quickly said they would continue payments that average $275 a week and go to those who have been out of work at least 26 weeks.

"In response to the state of Indiana's request for additional guidance, late this afternoon the U.S. Department of Labor confirmed that unemployment benefits will not be impacted by sequestration through the week ending March 9, and additional guidance will be forthcoming," said DWD Commissioner Scott Sanders.

"As such, the Indiana Department of Workforce Development will proceed with full payment of extended unemployment compensation until further notice."

Indiana provides state unemployment benefits for the first 26 weeks that Hoosiers are out of work, but then federal funding kicks in to extend the program through 63 weeks. Federal officials had warned that benefits would be cut by 9.4 percent, but DWD spokesman Joe Frank said the agency also needed to know how and when to implement those changes.

The email from Gilbert that prompted the DWD to reverse course said: "Yes – I can definitely confirm that the weeks ending 3/2 and 3/9 for EUC will not be impacted by sequestration. We are working to get you more information as soon as feasible and anticipate holding a state call on Friday, March 1st."

The Pence administration's initial move – which the governor did not mention earlier Wednesday during a news conference in which he discussed how the sequester would affect Indiana – was quickly criticized by the U.S. Department of Labor, which called it premature, and by labor lawyers who said Indiana might run afoul of federal law.

"We're not aware of any state that has decided to suspend the benefits, and in our view, doing so flatly contradicts basic federal requirements that states pay federal benefits on time," said Maurice Emsellem, the policy co-director for the National Employment Law Project.

Frank said earlier Wednesday that the state's original decision came as officials were "doing our best to hurt people in the least amount possible."

"The best course of action, everyone determined, was to hold off on giving everyone benefits because if we give people too much, then we're required by the federal government to get that money back," Frank said.

But Emsellem said Indiana's decision was "paternalistic" and would impose a "cruel hardship" on those who have been out of work for months. The state needed to keep at least some benefits in place, he said.

In the hours after the state's initial decision was announced, unemployed Hoosiers said they worried about what it would mean for them.

"This has been a struggle, to say the least," said Sherri Summit, a 48-year-old who lives in Unionville, Ind. and has been out of work for nine months.

Summit is a single mother who has three children – one who's an adult, but another who she's helping foot college bills and a third who is 10 years old – and lost her previous job in May 2012, three weeks after starting with a new company.

She said the $368 she's received each week in unemployment benefits have kept her afloat, although she's two house payments behind.

"I don't use any other government assistance – food stamps, anything like that. When I've gotten a little bit behind on things, my church has pitched in," Summit said.

"It just gets really scary. I don't have any health insurance; I have to pay for my medicine on my own. Where do you cut back when you've already cut back? Do you lose your home?"